Ann Taylor upgraded: Ignore the stock or buy ahead of earnings report?

However, in case you haven't noticed, the bulls are ruling things at the moment. How long that will last is up for debate. I've been anticipating a correction for a long time now. I've been completely, utterly wrong.

So, now that Ann Taylor has been upgraded, I have to say that the stock may be in an interesting position, at least from a price-action perspective. Shares gained 8% on Monday, backed by above-average volume, and closed near the high of the day. Pretty good technical sign.

However, the quarterly report is coming up this week, on Friday. The call is for a jump in profit, actually, according to Earnings.com. From break-even to 6 cents per share. Ann Taylor beat estimates in Q2.

Could this situation have the makings of a good earnings trade? I think it might. Although I place emphasis on the word trade.

Considering this unstoppable market, it is conceivable that there is a quick buy-and-sell thesis here. Look at Abercrombie & Fitch (ANF). Again, fundamentally, it's not so hot. But the stock continues on an upward path.

Traders should keep their eye on Ann Taylor, looking for a pullback. Regular investors who are only searching for long-term ideas in the market need not apply. If you do decide to trade this company, have an exit strategy in place. As always, perform your own due diligence before taking any action, and understand the risk involved (in this case, it's high).

Disclosure: I don't own any company mentioned; positions can change without notice.